Confidence in the Grayscale Bitcoin Trust (GBTC) is on the decline; in recent days, it has experienced significant fund outflows, totaling $1.18 billion, according to recent reports. The current week has witnessed a notable acceleration in this trend, with a fund withdrawal of $424 million, as reported by James Butterfill, an analyst at CoinShares.
The shift in GBTC’s dynamics comes amid growing investor interest in more cost-efficient U.S. funds, especially the newly launched spot Bitcoin exchange-traded funds (ETFs). These new investment vehicles have garnered considerable attention, amassing inflows of $2 billion, in stark contrast to the notable outflows from GBTC.
Net outflows this week so far of US$424m as investors switch to cheaper US Funds. GBTC seen US$1.18bn outflows since spot-based ETF launch & BITO US$141m outflows this week. Newly issued US spot bitcoin ETFs have now seen US$2bn inflows. Data as of close 16th Jan 2024. pic.twitter.com/BBhyZI2A5c
— James Butterfill (@jbutterfill) January 17, 2024
ProShares BITO, another Bitcoin ETF, also saw fund outflows during the same period, recording $141 million, according to Butterfill. This pattern of fund outflows aligns with the forecasts of ETF analyst James Seyffart, who predicts January 16 as a net outflow day for Bitcoin ETFs, primarily due to the impact of GBTC and BITO.
Despite the High Volume of Outflows, Grayscale Maintains its Position Thanks to its Enormous Bitcoin Reserves
Seyffart estimates that around $594 million will exit GBTC, contributing to a total of $1.173 billion in net outflows, while most other funds experience inflows. Despite these fund outflows, Grayscale maintains a strong position, safeguarding around 600,000 BTC in its reserves, according to various sources estimating holdings between 587,000 and 617,000 BTC.
Investor preference for new spot-based ETFs, offering greater cost efficiency, marks a shift in investment dynamics compared to traditional trusts like GBTC. As these products gain traction, investors seek to leverage more competitive cost structures and direct exposure to Bitcoin price movements offered by spot-based ETFs.
The significant fund outflow from the Grayscale Bitcoin Trust reflects a transformation in investor preference toward more cost-efficient products. This change in investment dynamics highlights the ongoing evolution of the landscape of financial products related to Bitcoin. With ETFs approved just a week ago, there is still much impact to absorb.